Why Public Sector Asset Management is Harder

There are lots of reasons associated with inefficiencies embedded in public sector infrastructure asset management.  David Sedlak in Water 4.0 points out the following in the context of an environment in which many utilities are unable to raise rates as much as needed - and the strategy becomes one of long-term deferred maintenance.

"The more frequent, less spectacular water and sewer line breaks that keep the repair crews scurrying around my neighborhood at all hours of the day and night are inconvenient - especially for people who live next to the broken pipe - but they are not necessarily more expensive than replacing the entire pipe network.  From the perspective of a utility's bottom line, it may be more efficient to allow a certain number of pipe breaks to occur each year than it is to replace all of the pipes before they wear out.  Of course, this savings is partially due to the fact that the utility does not pay the full costs of flooded streets, illness associated with the introduction of waterborne pathogens into the drinking water supply, and damage to the environment.  Pipe breaks can wreak havoc on rivers and streams because much of the drinking water and sewage that escapes broken pipes eventually finds it ways into a water body.  When sewer pipes leak, untreated wastewater can introduce waterborne pathogens, nutrients, and organic matter into surface waters.  Perhaps surprisingly, drinking water pipe breaks also can poise serious threats to the environment: at the concentrations present in drinking water, both chloramines (the residual disinfectant used in many drinking water systems) and copper (from corrosion of pipes) are toxic to many species of fish.  Just like an aging car that needs a repair every few weeks, the pipe network will eventually reach a breakeven point when it makes more sense to replace the remaining pipes that it does to keep repairing the leaks."